Most people are now aware that your credit scores are important when you apply for a mortgage loan, but few understand where these scores come from or what you can do to improve your score. So let’s begin with the basics.

The first thing to understand is that there are three major credit bureaus used by mortgage brokers and lenders, Equifax, Transunion and Experian. Mortgage brokers generally require a tri-merged credit report, which reports the information found by each of these three credit bureaus. Each bureau will also provide a credit score, so you will find three different credit scores on the tri-merged credit report. The mortgage broker with then use the ‘mid score’, which is the middle score of all three. For instance if the tri-merged credit report shows a Equifax score of 662, Transunion score of 681, and Experian score of 661, your mortgage broker will use the mid-score of 662 as your credit score for the purpose of evaluating credit.

Why are these numbers different? You have only a fixed number of liabilities, past and present, and for each liability, you have either paid on time or you have not. Logically, all reports should show the same credit history and have the same credit score. Realty is different. Some creditors report to only one or two of the bureaus, some collection accounts will not be picked up by all of the bureaus either when they are listed or when they are paid, etc. Some of the information a bureau receives comes in incorrectly. Credit scoring is done by each bureau using it own unique (secret) criteria. Finally, there are different types of credit scores, some developed for credit card lenders, some for general consumer credit and of course, some used by mortgage brokers and lenders. These credit scores are FICO scores and run from a low of 300 to a high of 850. For more information about credit scores, please go to http://OregonsBestMortgage.com.